MILK
At least nearby Class III milk futures were able to post gains with only support from dry whey strength. It may be difficult to see much more price gains unless buyers of cheese turn more aggressive. The month of October is no better month to see a bounce in prices as buying for the holidays increases. If there is little to no price improvement this month, it will be a difficult winter as demand generally slows and buyers become less aggressive. The spread of Class IV futures over Class III for the month of October is exceptional at nearly $5.00. In about another week, the October prices will not move very much as the trade will have the price mostly calculated, ensuring the wide spread will remain for the month. Class III milk futures through the next year do not look very promising, but much can change as the year unfolds.
AVERAGE CLASS III PRICES
| 3 Month: | $17.36 |
| 6 Month: | $17.71 |
| 9 Month: | $17.94 |
| 12 Month: | $18.10 |
CHEESE
Barrels have been showing more strength over the past week while blocks have seen a very limited upside. September and October should see increased buying as preparation is made for holiday demand. However, sellers have been aggressive resulting in buyers being able to purchase without having to chase the market higher. Supply is more than sufficient for demand. Slight inventory growth in August kept pressure on the market.
BUTTER
The slight decline of butter today does not necessarily mean the price rally is over. This happened a little over a week ago only to find more aggressive buying surface and prices moving to another new contract high. This will not continue forever, but the current rally seems to be real and not just an aberration. It does not appear this is impacting demand.
OUTSIDE MARKETS SUMMARY
December corn closed down 3.75 cents per bushel at $4.8825, November soybeans closed down 1.75 cents at $12.6425 and December soybean meal closed up $2.50 per ton at $374.60. December Chicago wheat closed up 4.50 cents at $5.7275. December live cattle closed down $1.33 at $185.35. November crude oil is up $3.56 per barrel at $86.35. The Dow Jones Industrial Average is up 197 points at 33,605 with the NASDAQ up 53 points at 13,484.
